America, like so many earlier economic powerhouses in pre-decline terminal mode, chose to allow its biggest corporations and wealthiest of wealthy elite to siphon away and offshore America's wealth and its industrial strength to China and other low-wage countries. It was all about extracting short-term maximum profits at the long-term consequence of the American state and its people.

Old school Republican party strategist, Kevin Phillips, documents all of this in his 2005 book, American Theocracy.

One part of his book explores the final fatal steps taken by previous economic superpowers - the Spanish, the Dutch and the British by turns. It chronicles how they all began from relatively insignificant agrarian states, advanced into manufacturing and technology (except for the Spanish who looted Central America), established dominance in trade until finally, for the sake of their financial elite, decided to switch their economic foundation, by offshoring their economic activity to save costs and amplify returns. In this, he notes, each nation adopted what today is known as a "FIRE" economy (finance, insurance and real estate) where wealth/money and not goods becomes the commodity of trade. By outsourcing manufacturing and production, the FIRE economies use their wealth to establish and grow their eventual successors' economies. There is no history - none - of that ever being reversed.

All America has done is to follow in the flawed and greed-driven footsteps of the superpowers that rose and fell before it. Nobody stole anything because nobody had to steal what was freely given.

Another critical point that Phillips draws out is that FIRE economies are inelastic, inflexible and far less resilient to recessions and trade wars than are manufacturing economies which bounce back quickly. FIRE economies recover slowly and incompletely leaving them weaker and ever less resilient to subsequent seismic disruptions.

America's problems are entirely homegrown. It was America that drove most of the globalization that now plagues its economy and its working classes, blue and white collar. It surrendered to an economic ideology, entirely faith-based, that was long on promises that were never met.

China can never fix problems that were sown by America's bought and paid for Congress and its economic elites. You paid for your ticket and boarded the ride. You don't get off until the ride's over.

2 comments:

While I wrote this, Toby, my mind went back to a statement made by Theodore Roosevelt in his "square deal" speech in 1910. He explored the fundamental duty of progressive democratic governments to regulate the eternal struggle between labour and capital to achieve the best possible outcomes for them and the country.

It was this critical principle that we abandoned when our governments opted to pursue globalization. They yielded their essential sovereign power to regulate industry and provide basic labour protections. With no compensation whatever they handed over unfettered access to our national markets. That access, coupled with capital's freedom of movement, were all that was needed to gut our economies and grievously undermine what had been our middle classes.

Let's put it this way, Nike wouldn't have relocated its shoe production to Vietnam if it risked losing its access to North American consumers. It wasn't paying its Vietnamese workers "Nike runner-level" wages. And so globalization was "win/win" for multinationals and "lose/lose" for us. We were spun tales of an "information economy" and great prosperity for all but they turned out to be untrue.